Employees

Company cars and fuel (Table C)

The taxable benefit on most company cars will be unchanged in 2006/07, because the level of CO2 emissions at which the minimum 15% charge starts to increase remains at 140g/km. The figure will not now change until 2008/09 - in that year, the 15% charge will apply at 135g/km (increasing the taxable percentage of list price by 1% for most cars) and a new 10% charge will apply for cars with emissions of 120g/km or less.

The tax charge on the benefit of free fuel for use in a company car also remains unchanged: it is based on the same percentage applied to a fixed figure of £14,400 (which has not changed since it was introduced in 2003).

3% is added to the CO2-based figure for diesel cars. Some low-emission diesels used to be exempted from this addition, but this exemption was removed for cars registered from 1 January 2006 onwards.

Childcare

For some years, the provision of childcare by an employer through a "workplace nursery" has been a tax-exempt benefit. Since April 2005, indirect childcare funding by employers (including the use of vouchers) of up to £50pw has also been exempt from tax and NIC. This limit increases to £55pw from 6 April 2006.

Mobile phones and computers

For several years, there has been no tax charge where an employer loans a computer or a mobile phone to an employee, even if there is private use by the employee or a member of the employee's family. The limit on computer equipment has been an annual value of £500 (effectively £2,500 worth at cost), but there has been no limit on the number of mobile phones or the amount of calls.

>From 6 April 2006, the exemption for private use of computers is removed altogether, and the exemption for mobile phones is restricted to one per employee (although private use will still not be charged for that one phone).

At the same time, a possible charge to NIC where an employer provides top-up vouchers to an employee is removed, as long as the employee only has one phone.

Tax Trap

Have you more than one mobile phone from work?

Eye tests and corrective glasses

Employers are required by law to pay for eye tests and, if necessary, corrective glasses for workers who use computer screens. The Revenue would not normally charge tax on this, but there is a possibility that providing these benefits by means of a voucher could trigger a liability. The rules are changed from 6 April 2006 to prevent this.